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Luxembourg Microfinance and Development Fund

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

LMDF's vision and mission of working with the most marginalised are key to its investment policy. In order to achieve this, LMDF concentrates its investment strategy on emerging (Tier 2) microfinance institutions as it believes these are closer to the entrepreneurs and communities with which it works. When examining an MFI, both financial and social criteria are taken into account- we will look at the proportion of rural, female and young entrepreneurs an institutions supports, as well as its governance credentials and loan sizes to evaluate its social impact. Both social and financial measures are also key to our regional analysis process in which we monitor the development situation and financial inclusion levels in each country, as well as more conventional metrics such as politics and economics.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

The fund focuses on promising MFIs which have a positive social impact. Promising MFIs are institutions which have a proven business model, have reached or are close to reaching financial sustainability and have a strong social vision and mission focused on positive impact for the ultimate clients. We focus mainly on Tier 2 MFIs, those at an intermediate stage of maturity, which have strong social aims. The fund does not directly engage with the end-clients of the MFIs (micro-entrepreneurs, small savers and insurance policy holders) as this activity requires local presence and local knowledge and is best done by locally implanted MFIs.
The fund invests in developing countries in Africa, Asia and Latin America. The decision to invest will be based less on the overall level of development of the country in question, but rather more on the merits of the individual cases, i.e. the potential benefit for the local population and the prospects of autonomy for the MFI. Due diligence looks at quantitiative and qualitative criteria including the Institutional structure of the MFI, its social profile (social mission, targeted clients, product offering, quality of established links with customers, etc.) and its financial robustness.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

Please see our prospectus which covers our investment policy, guidelines on social factors and asset class specific guidelines. This is published on our website and hence available to the public. Further information is also available in our audited and unaudited reports.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

In accordance with Luxembourg law the LMDF has a Conflicts of Interest policy which means that it identifies key issues which may give rise to a conflict of interest and considers the best ways to manage, monitor or disclose these conflicts if they arise. The policy is monitored by the Board on a regular basis. A conflict of interest log is maintained.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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